If you're a home ownership virgin, or it's been at least three years since you've owned a home, you need to learn about mortgage revenue bond (MRB) programs. That is, unless you have a problem with putting up little or nothing for your home purchase and and saving big bucks with a subsidized mortgage interest rate.

New Home Tips: Revenue Bond Mortgages

If the monthly payment on a mortgage--even with the continuing trend in low mortgage rates--or a down payment makes you think home ownership will always be out of reach, see if you qualify for a mortgage revenue bond (MRB).

The Name Is Bond. Mortgage Revenue Bond

Mortgage revenue bond programs were created to make home ownership more attainable. MRB programs subsidize home purchases for qualifying first-time home buyers. The funding comes from tax-exempt bonds issued by state and local governments.

First-time home buyers (including those who have not owned a home in at least three years, displaced home makers, and others) with incomes less than or equal to 115% of the gross income for their family size can qualify for below-market mortgage interest rates. MRB programs may also be combined with other community home buyer programs, such as Fannie Mae's My Community Mortgage or Freddie Mac's Home Possible 97.

Bonding Experience: MRB Facts

• Your purchase price will be limited, depending on home prices in your area. For example, in Arizona, MRB purchases are limited by county to prices ranging from just over $236,000 to a little under $400,000.
• You have to use the property as your primary residence.
• To be eligible, you cannot in most cases have owned a home in the last three years. This is the general definition of "first-time buyer" for most government home ownership programs.
• You'll have to meet income and credit scoring requirements. Typical guidelines require that, with your payment lowered by the subsidized mortgage rate, your debt-to-income ratios can't exceed 31% for housing expense and 43% for all monthly debt payments. Your credit score, unless it has been lowered by inaccurate information, may have to exceed 620 or 640.
• The property must pass an inspection and appraise for at least the sales price.
• Depending on the state you live in, you may be required to keep the home for a certain number of years or face a tax penalty.

Home Possible 97 or Fannie Mae My Community Mortgage

Freddie Mac's Home Possible 97 or Fannie Mae's My Community Mortgage feature extra underwriting flexibility, so qualifying for a low down payment loan is easier. These mortgages can be combined with MRBs to create a loan with a tiny down payment and a rock-bottom interest rate. Keep in mind that:

• Your down payment requirement is 3% (for single-unit properties, including condos) to 5% (2- to 4-unit homes or manufactured homes, or for loans that can't be electronically underwritten).
• You need to complete home ownership education taught by an approved provider.
• Your credit and income must pass muster with Freddie Mac or Fannie Mae's underwriters.
• Mortgage insurance is required, but coverage is lower and costs less.
• A cash-out refinance mortgage is not allowed under these programs.

MRB Mortgage Rates: How Low Can You Go?

If your home loan interest is subsidized with an MRB mortgage, your interest rate is substantially lower than the market interest rates everyone else pays. Louisiana's program, for example, currently offers an interest rate of 4.10%. California's MRB rate ranges from 3.25% to 5.25%, depending on eligibility and benefits. (The program also offers down payment assistance.) Arizona's MRB rate is about 1% below the market; under normal circumstances, buying down your fixed interest rate by a full percent costs about 6 discount points, so this is a big help.

Some programs also offer grants, low- to no-interest loans, or "silent" second mortgages for down payments.

Bond Girls (and Boys): Find Your MRB Program

The mortgages can only be obtained through MRB-approved lenders and specially trained loan officers. You can search online for revenue bond mortgages in your state, and most MRB websites include links to approved lenders. Or just ask any loan officer you talk to if the lender is approved to underwrite these loans.

How do you know if you're eligible? Check the median household income in your area with efanniemae.com.